Coming up fast behind you

Five practical moves to help you outrun inflation

NEW YORK (MarketWatch) -- Call it stagflation or what you will -- it's getting harder to make ends meet these days. It's time for action.

Rising health-care and education costs have topped the headlines for years. We're getting used to paying more at the pump. But recent figures show rising prices hitting closer to home. Higher commodity costs are driving prices for food, clothing and other basic necessities.

Sure, we've gotten our breaks. Electronics have been getting cheaper for years. The China effect has held prices steady for lots of manufactured goods, including clothing. And the housing market -- well, you could say that housing is getting cheaper, but that only helps those lucky few in the market today.

Inflation happens slowly -- an increase here, and increase there, and suddenly your finances fall behind the curve. If you spend $50,000 a year excluding housing payments, a 4% annual inflation rate suggests your expenses will rise by some $2,000.

Your income may keep up, but it's hard to count on that. I say it's time to aim high -- to figure out how to save at least $1,000 this year. Not to pay down debt, put in savings or improve our lifestyles -- but to stay ahead of the inflation monster.

Five ways to save a grand

The following five practical suggestions can save $1,000 apiece:

Don't "obey your thirst." At least, not all the time. The cost of beverages, in all forms, adds up. Wine, soda, beer, even bottled water are expensive at home, not to mention at restaurants. Order drinks with free refills, or drink ice water. At home, try a filtered water pitcher or learn to drink juices, especially from concentrate. One friend of mine quaffed two 12-packs of soda a week -- $12 or so considering redemption values -- and quit when his kids started to follow suit. He switched to lime juice with great success. Without much sacrifice, I think you can save $20 a week on beverages -- at home, at restaurants, or some combination of the two. I can hardly think of an easier way to save a grand.

Put your cars in "econo-drive." Energy prices send no clearer message than it's time to cut back on driving. Put differently: gas prices are part of the problem, but how much we drive is usually the other problem. Learn how to combine trips and think of alternatives to trips, like putting kids on school busses instead of driving them to school (which will train them to ride the bus too). Or challenge yourself and your family to make one day a week car-free. Save 2,000 miles a year -- which isn't so much for an average family driving 25,000-30,000 miles. I think the IRS reimbursement of 50.5 cents/mile is pretty close to actual cost, so that'll save the $1,000. And your cars will last longer.

Thrift-shop for those threads. According to the latest Bureau of Labor Statistics inflation report, overall apparel costs rose for the first time since 1998. What do you do? Naturally, buying fewer clothes and shopping for enduring value is part of it. But consignment and thrift shops are great places to get good stuff, even fancy designer names. Lately, consignment stores have acquired new stock as people turn their extras into a little cash. It's fun. A friend of mine checks out the consignment stores when she travels -- it gives her more to choose from and something to do.

Do you own work. That is, the housework, indoor or outdoor. Mow your own lawn and save maybe $40 to $60 a month. It's good exercise, too. Learn to paint walls or cut hair. I mean, don't get silly -- if you can't iron a shirt, don't iron shirts. If you can't reach the drain plug, don't change your oil. But I bet you can find at least a couple of things you can do yourself, and it's a satisfying feeling.

Suspend services you don't need. Seems obvious, but I bet you have a few you've forgotten about or are hanging on to for obscure just-in-case reasons. Still have that old dial-up account? How about the "premium" cable or satellite package? Or those "hot" domain names they keep asking you to renew. Do you really need them still? Could that pest control be done every other month instead of monthly?

Some perspective

The point isn't to turn into a miserable miser -- the point is to prepare for the inevitable. Good financial management implies always planning ahead.

And if today's inflationary monster turns out to be more growl than bite, or if your income keeps up with inflation on its own, so much the better. You'll have $1,000 extra to spend on something you want -- or to prepare for the next financial storm. Either way, it's a good thing.

Jennifer Openshaw is the author of "The Millionaire Zone," CEO of Family Financial Network, and executive director of Debt and Credit Advisors. She hosts ABC Radio's Winning Advice, appears regularly on the Fox Business Network, and serves as an adviser to some of America's top corporations. You can reach her at jopenshaw@themillionairezone.com

Jennifer
Openshaw

Jennifer Openshaw is executive director of the Financial Women's Association and author of "The Socially Savvy Advisor," due out this Fall. She's advised Fortune 500 companies, including Microsoft, and has appeared on Oprah, Dr. Phil, CNN and Fox.

MarketWatch Partner Center

Jennifer
Openshaw

Jennifer Openshaw is executive director of the Financial Women's Association and author of "The Socially Savvy Advisor," due out this Fall. She's advised Fortune 500 companies, including Microsoft, and has appeared on Oprah, Dr. Phil, CNN and Fox.

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